Unemployment dynamics in the UK

Authors: B. Henry¹; J. Nixon²

Source: Oxford Economic Papers, Volume 52, Number 1, 1 January 2000 , pp. 224-247(24)

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Abstract:

This paper examines the determinants of unemployment in terms of its statistical correlates. At one extreme unemployment has been viewed as highly trended in the post war period, with the implication that equilibrium unemployment has followed a broadly similar path. Alternatively, unemployment can be viewed as a highly persistent series that departs for long periods from a more stable equilibria. This paper reports on reduced form models of unemployment and suggests that many exogenous variables that have typically been associated with movements in equilibrium unemployment have little explanatory power. Instead, unemployment may be characterised as a near unit root process driven by a mixture of mean shifting I(0) variables.

Document Type: Original article

Affiliations: 1: Centre for Economic Forecasting, London Business School, Sussex Place, Regents Park, London NW1 4SA, UK 2: Bank of England, Threadneedle Street, London EC2R 8AH, UK

Publication date: 2000-01-01

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Oxford Economic Papers is a general economics journal, publishing refereed papers in economic theory, applied economics, econometrics, economic development, economic history, and the history of economic thought. It occasionally publishes survey articles in addition to original papers. Books are not reviewed, but substantial review articles are considered. The journal occasionally publishes survey articles in addition to original papers, and occasionally publishes special issues or symposia.